Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: zz-x2580
Marketing
Revision B
Q2 Boomerang Book
An Australian based graphic designer has recently come up with a new idea to help
parents better organise the care of their babies and young children. The idea, a book
called ‘Boomerang Book’, holds information on babies’ and kids’ needs and
preferences in a Filofax style diary. The ‘Boomerang Book’ has sections on food and
drink, activities, favourite toys, bed and nap times, and emergency phone numbers – a
vital resource for childminders and babysitters, or anyone else looking after young
children when they are away from their parents.
In terms of the production cost of the ‘Boomerang Book’, total fixed costs are $120,000
and the variable cost per unit is $8.50.
(i) The graphic designer is uncertain how to price the ‘Boomerang Book’. You are
required to advise the graphic designer on the steps which should be taken to reach an
appropriate pricing decision. (20 Marks)
(ii) Imagine that a cost-oriented pricing method is to be used to determine the price
for the ‘Boomerang Book’. Calculate the unit cost and price which should be charged
for the ‘Boomerang Book’ assuming sales of 50,000 ‘Boomerang Books’ in the coming
year and a desired target margin of 25% on the selling price. (5 Marks)
(iii) Imagine sales of the ‘Boomerang Book’ are higher than the initial projection and
the variable production cost per unit decreases to $8. Calculate the new break-even
volume for the ‘Boomerang Book’. (5 Marks)
1
2
31/3/2022
2
Q2 Boomerang Book - Dec 2012
An Australian based graphic designer has recently come up with a new idea to help
parents better organise the care of their babies and young children. The idea, a book
called ‘Boomerang Book’, holds information on babies’ and kids’ needs and
preferences in a Filofax style diary. The ‘Boomerang Book’ has sections on food and
drink, activities, favourite toys, bed and nap times, and emergency phone numbers – a
vital resource for childminders and babysitters, or anyone else looking after young
children when they are away from their parents.
In terms of the production cost of the ‘Boomerang Book’, total fixed costs are
$120,000 and the variable cost per unit is $8.50.
(i) The graphic designer is uncertain how to price the ‘Boomerang Book’. You are
required to advise the graphic designer on the steps which should be taken to reach an
appropriate pricing decision. (20 Marks)
(ii) Imagine that a cost-oriented pricing method is to be used to determine the price
for the ‘Boomerang Book’. Calculate the unit cost and price which should be charged
for the ‘Boomerang Book’ assuming sales of 50,000 ‘Boomerang Books’ in the coming
year and a desired target margin of 25% on the selling price. (5 Marks)
(iii) Imagine sales of the ‘Boomerang Book’ are higher than the initial projection and
the variable production cost per unit decreases to $8. Calculate the new break-even
volume for the ‘Boomerang Book’. (5 Marks)
3
4
31/3/2022
3
Q2 Boomerang Book - Dec 2012 Answer (ii & iii)
Q2 Y-coil shoes
If Brad Reno has his way, every man, woman and child will one day walk with a spring
in their step – and on their shoes. The spring coil will be attached to the heel of a
space-age shoe that Reno wants to sell to the world.
The inventor of the Y-coil line of pain-relief footwear isn’t doing too badly – in 12
months he has already sold 50 000 pairs of the footwear that make you bounce as if
you are on a trampoline. Since reaching the shelves in the UK, the shoes have become
something of a cult. They are only sold through authorised dealers and targeted
towards those with painful leg, foot and back problems. The shoes have proved to be
popular among police officers, nurses and anyone who works on their feet. They are
priced at roughly £75–£100, depending on the style, but Reno argues that freedom
from pain is priceless.
Required:
i. Brad Reno has set a price level of £75–£100 for his pain-relief footwear. What steps
should Brad have taken to reach this pricing decision? Explain which price setting
method you would have recommended be used and why. (20 marks)
ii. Imagine the company has fixed costs of £8.2 million, and that each pair of shoes has
a variable cost of £62 and retails at £100. If the present rate of sales is maintained,
how long will it take Brad to realise a target return of £1 000 000? (10 marks)
5
6
31/3/2022
4
Q2 Y-coil shoes - Dec 2008
If Brad Reno has his way, every man, woman and child will one day walk with a spring
in their step – and on their shoes. The spring coil will be attached to the heel of a
space-age shoe that Reno wants to sell to the world.
The inventor of the Y-coil line of pain-relief footwear isn’t doing too badly – in 12
months he has already sold 50 000 pairs of the footwear that make you bounce as if
you are on a trampoline. Since reaching the shelves in the UK, the shoes have become
something of a cult. They are only sold through authorised dealers and targeted
towards those with painful leg, foot and back problems. The shoes have proved to be
popular among police officers, nurses and anyone who works on their feet. They are
priced at roughly £75–£100, depending on the style, but Reno argues that freedom
from pain is priceless.
Required:
i. Brad Reno has set a price level of £75–£100 for his pain-relief footwear. What steps
should Brad have taken to reach this pricing decision? Explain which price setting
method you would have recommended be used and why. (20 marks)
ii. Imagine the company has fixed costs of £8.2 million, and that each pair of shoes has
a variable cost of £62 and retails at £100. If the present rate of sales is maintained,
how long will it take Brad to realise a target return of £1 000 000? (10 marks)
Q2 Y-coil shoes - Dec 2008 (i)
7
8
31/3/2022
5
Q2 Y-coil shoes - Dec 2008 (ii)
Total time needed
242,105/50,000 = 4.84 years
Actual time needed from now
4.84 - 1 = 3.84 years（or 46.08 months）
Since 50,000 pairs of shoes have been sold in 12 months, he needs another 3.84 years
to achieve the target return.
Target return volume
Q2 Prize
Prize is a reward and recognition company based in Newcastle, England. The company provides
corporate rewards, and incentive and motivation schemes which assist employers in retaining
staff, a key issue as few firms want to see their investment in the skills and experience of their
workforce migrating to a marketplace rival. Commenting on the demand for its services, Peter
Blair, the Managing Director of Prize said: ‘Our company has grown out of the fact that
employers want to mark employee performance that is over and beyond the call of duty. They
want to both motivate and reward exceptional work – be it the successful completion of a
project, the making of a sale, or the achievement of a sales target. But increasingly, it is not
enough to just offer financial recognition. Employers come to us to offer their staff life-changing
experiences.’
What this boils down to is rewarding the valued employee with a memory, with an occasion of
exhilaration or excitement that he or she will never forget. It might be white-water rafting, it
might be parachuting – but the point is that it is associated with their life outside of work. The
event will always remind them of the employer that furnished the experience. Blair believes that
this facet of company life is becoming more and more important: ‘The experience and its
subsequent memory induce a type of brand loyalty to the employer that provided it.’
Required:
(i) Explain how potential clients will approach this buying decision and the steps Prize can take
to facilitate the process. (15 marks)
(ii) What is likely to be important to clients when they evaluate the service provided by Prize?
(15 marks)
9
10
31/3/2022
6
Q2 Prize – Dec 2015
Prize is a reward and recognition company based in Newcastle, England. The company provides
corporate rewards, and incentive and motivation schemes which assist employers in retaining
staff, a key issue as few firms want to see their investment in the skills and experience of their
workforce migrating to a marketplace rival. Commenting on the demand for its services, Peter
Blair, the Managing Director of Prize said: ‘Our company has grown out of the fact that
employers want to mark employee performance that is over and beyond the call of duty. They
want to both motivate and reward exceptional work – be it the successful completion of a
project, the making of a sale, or the achievement of a sales target. But increasingly, it is not
enough to just offer financial recognition. Employers come to us to offer their staff life-changing
experiences.’
What this boils down to is rewarding the valued employee with a memory, with an occasion of
exhilaration or excitement that he or she will never forget. It might be white-water rafting, it
might be parachuting – but the point is that it is associated with their life outside of work. The
event will always remind them of the employer that furnished the experience. Blair believes that
this facet of company life is becoming more and more important: ‘The experience and its
subsequent memory induce a type of brand loyalty to the employer that provided it.’
Required:
(i) Explain how potential clients will approach this buying decision and the steps Prize can take
to facilitate the process. (15 marks)
(ii) What is likely to be important to clients when they evaluate the service provided by Prize?
(15 marks)
Q2 - Prize - Dec 2015 Answer (i)
11
12
31/3/2022
7
Q2 - Prize - Dec 2015 Answer (ii)
13
14
31/3/2022
8
Q3 Essay
When the marketing consultant Peter Green was invited to develop an integrated
marketing communications plan for a chain of petrol stations in the West Midlands,
England, he drove into one of them to check out the customer experience. The
forecourts were filthy, the attendants sloppy and the service virtually non-existent.
When he called the client to find out what plans they had to address these issues, he
was told not to worry because all that was expected from him was a bright new look
and feel for the advertising. He walked away from the job.
Required:
i. What are the steps involved in developing an integrated marketing communications
plan and what type of promotions mix would you anticipate being developed for a
chain of petrol stations? (30 marks)
ii. Was Peter Green justified in walking away from the job? Explain your reasoning.
(10 marks)
Q3 Essay – Dec 2009
• When the marketing consultant Peter Green was invited to develop an integrated
marketing communications plan for a chain of petrol stations in the West
Midlands, England, he drove into one of them to check out the customer
experience. The forecourts were filthy, the attendants sloppy and the service
virtually non-existent. When he called the client to find out what plans they had to
address these issues, he was told not to worry because all that was expected from
him was a bright new look and feel for the advertising. He walked away from the
job.
Required:
• i. What are the steps involved in developing an integrated marketing
communications plan and what type of promotions mix would you anticipate
being developed for a chain of petrol stations? (30 marks)
• ii. Was Peter Green justified in walking away from the job? Explain your reasoning.
(10 marks)
15
16
31/3/2022
9
Q3 Essay – Dec 2009 - Answer i
17
18
31/3/2022
10
On the one hand, Peter Green was correct to walk away from the job because clearly
the client does not appreciate the need for an integrated approach to marketing
communications. It is, of course, vitally important that the brand values expressed in
marketing communications activity are consistent with the reality of the product and
service offering. In other words, the qualities and principles which lie at the heart of
the petrol station chain brand must be reflected in their offering and service.
On the other hand, perhaps Peter Green should have stuck with the job and taken the
opportunity to explain to this client the value of an integrated approach to marketing
their service. Depending on his powers of persuasion, this might be a whole new
beginning for the petrol station, providing the basis for developing sustainable
competitive advantage for the years to come.
Q3 Essay – Dec 2009 - Answer ii
Q3 Essay
“In today’s global market we rarely have the luxury of waiting for
everybody to get comfortable before rolling out a new product … we
usually have to get it out first to pre-empt the competitors.”
Based on an extract from: Business Strategy Review
Why do some companies try to ‘pre-empt the competitors’ by being first
to launch a new product and in what circumstances would you
recommend launching a mass market penetration strategy for a new
product?
(Total 40 Marks)
“In today’s global market we rarely have the luxury of waiting for
everybody to get comfortable before rolling out a new product … we
usually have to get it out first to pre-empt the competitors.”
Based on an extract from: Business Strategy Review
Why do some companies try to ‘pre-empt the competitors’ by being
first to launch a new product and in what circumstances would you
recommend launching a mass market penetration strategy for a new
product?
